Raul Katz

Can Mergers Mend Industry Woes?

Abstract:
The consolidation of the industry into a few oligopolies would face the risk of perpetuating economic inefficiencies in the provisioning of a number of support functions by perpetuating legacy infrastructure and limiting innovation. Given the ongoing margin pressure incurred by telecommunications operators, it is critical to foster the development of intermediate markets to achieve efficiency in the provisioning of services, from engineering and network deployment, to systems development and maintenance, and data center and network operations. The need to reduce expenses is so important that incumbents will be incentivized to enter into outsourcing agreements that would result in an economic benefit, despite the potential for loss of marginal competitive advantage.